Technology risks give compliance professionals sleepless nights
A newly released survey of US regulatory compliance professionals shows 63 percent say that technology-driven risk is the most significant market force likely to cause compliance issues for US financial services firms in 2025.
Other forces cited are global economic instability (58 percent), increasing regulatory complexity (48 percent), digital assets and crypto markets (37 percent each) and geopolitical instability (20 percent).
The study from compliance solutions specialist eflow Global, of 300 compliance decision makers across three continents, asked what the main regulatory challenges keeping them up at night are. US professionals cite keeping abreast of regulatory changes (43 percent), assessing risk profiles across multiple asset classes (42 percent) and accurately identifying insider trading and market manipulation (40 percent) as their top three choices. These are followed by integrating trade and electronic communications surveillance as part of a holistic strategy and being able to fully understand and explain the output of trade surveillance reports -- each at 38 percent.
Ben Parker, CEO of eflow Global, says:
US regulators continued to focus on eComms surveillance failures as a major enforcement area in 2024 while our survey revealed that just 52 percent the country's regulatory professionals have only some degree of confidence in their firm's ability to integrate trade and eComms data as part of a holistic approach to trade surveillance.
With the volume of global enforcement actions surging by 260 percent year-over-year in 2024, and regulators increasingly targeting small- and mid-market firms, this should serve as a wake-up call for the thousands of smaller financial institutions and trading firms seeking to proactively enhance their compliance operations.
When asked how regulators could better support firms in their efforts to ensure regulatory compliance, 62 percent cite the need for greater transparency around regulator expectations and enforcement action. 48 percent say closer collaboration between regulators and compliance teams, followed by greater standardization of international regulatory requirements (45 percent), clear guidance on minimum core technology standards (37 percent) and increased use of data and technology to enhance market oversight and greater credit for proactive self-reporting (30 percent each).
The full report is available from the eflow Global site.
Image credit: tommaso1979/depositphotos.com